The deal is marred by a “flawed process and conflicts of interest,” shareholder Mary Smart said in the proposed group lawsuit made public today in Delaware Chancery Court in Wilmington.
Directors of Irving, Texas-based Zale “engaged in a process that was designed to benefit Signet and secure material personal benefits for themselves,” Smart said in the filing, adding that Theo Killion, Zale’s chief executive officer, will retain his position and “lavish compensation” as part of the deal.
Signet, the largest jewelry chain in the U.S., announced Feb. 19 that it would pay $21 per share in cash in the transaction which would also include about $500 million in Zale’s debt.
The purchase marks the biggest yet for Hamilton, Bermuda-based Signet, operator of the Kay and Jared brands. It gives Signet brands such as Zales and Peoples and adds more than 1,600 retail locations to its current footprint of 1,900 stores.
The case is Smart v. Zale Corp., CA9420, Delaware Chancery Court (Wilmington)
To contact the reporter on this story: Sophia Pearson in federal court in Philadelphia at